Credit Crunch Risks in Focus for Fed Traders as Cut Bets Build
- Investors have slashed expectations for Fed rates amid turmoil
- Markets to ‘shrug off stronger data’ in near term: McIntyre
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Bond traders are zeroing in on just how much the ongoing turmoil in the banking system might tighten credit conditions and hurt the US economy, potentially forcing the Federal Reserve to change tack and cut interest rates.
Shorter-dated Treasury rates extended their decline Thursday following a slump the day before in the wake of the latest Fed decision. The moves came after the US central bank tempered its language around how much additional tightening it might do, even as it implemented another quarter-point hike.